tv Bloomberg Markets Bloomberg June 1, 2015 11:00am-12:01pm EDT
what should investors be focused on it? in rare earthom minerals is done. lindsey graham is about to come the seventh official republican candidate. he will make an announcement later this hour. olivia: good morning. pimm: we are 90 minutes into the trading day here in new york and let's look at the markets and see how they are trading right now. let's look at stocks, a little bit of a decline. no the dow has moved higher. is over 2100. the nasdaq has gained 1.3
olivia: we have some better figures. the focus next week is on the jobs report. you are seeing treasury yields up. at what is happening in europe ahead of the european close. we are showing the yields higher. of this does not appear to be an eminent deal on it greece. the euro is off its session lows. it is trading a little bit weaker against the dollar. pimm: i see parity for you when you go to france. but to get some of the top stories. it is a semiconductor deal that has been rumored for months. the largest chipmaker has agreed to i altera. -- by altera. theres a 56% premium over
closing price on march 26. coming up later today, we will talk with the chief executive of intel. some factoryceived data. the index rose to a three month high. those gains will probably support economic growth after gdp contracted during the last order. a stronger dollar is making exports more expensive. pimm: americans are saving money rather than spending it. gas purchasess installed while income group. accounts fornding almost 70% of economic activity. program has been suspended. were raisedbstacles by senator rand paul. the most controversial allows
the nsa to collect and store millions of phone records. we spoke to glenn greenwald, he read -- won a pulitzer prize. >> mass surveillance is wrong. why should the government be in the business of collecting data about what we as law-abiding citizens do and say. it's inherently corrosive to basic liberties. olivia: the senate is expected billss a hasp -- house that extends the program. there will be some limits on spine. greece and the creditors are blaming each other for a lack of progress on bailout talks. defaultlem is not the -- the fault of his government. kris has to follow reforms it agreed to before he took office. greece has to pay the imf $1.8
billion. both sides have said that greece plans to say in the euro. it might be best for greece to just leave. >> we need them to leave the can so the remaining europe say we had a failure and we need to fix it. people inside the euro will see what it means to live outside the euro. olivia: this round of talks is now in the fifth month. they want to make changes to the pension system and labor laws. they will not give greece more bailout money until it sees concrete performance. needed help, they went to one of the best robotics institutions in the world. they never figured it would turn out like this. they hired away 40 of carnegie mellon's scientists. some scientists on their salaries double and they got hundreds of thousands of dollars
in a bonuses. those are your top stories. is the word for the week. that is how barclays is describing the next five days. the united states is releasing a glut of economic data. central bank and the bank of england and the reserve bank of australia are convening this week as well. greece's pacing that $300 million euro payment to the international marry -- monetary fund. global he is the investment person. a pivotal week for the markets. jobs on friday at a lot of hate it today. what is the pivotal thing for you? steve: anything that is time dependent. you find that these deadlines seem to be extended and another one comes and another one comes and it could continue that way all month long. in terms of data, the employment report on friday is key to sort
of markets understanding how strong the second quarter will be. it seems doubtful we will have such a decisive report that the fed would tighten policy this month. at aa: i was looking recommendations, you are not in number two. you are not overly bullish anywhere. why not? steve: we like equities. incomee the highest producing assets in the world. we have an ongoing recovery. we will be reaching new all-time highs in profits. these will not be declines. olivia: everybody comes on here it says there is no earnings growth this year. steve: take a look. there is a very large drag on earnings from the energy sector, but overall it is positive. the outlook for the rest of the year seems decent. there is not a powerful recovery. we are very late in the current one. other markets in the world are using monitor -- monetary
policy. that is europe and parts of asia. this is been a preventable market for six years. it's not as easy to be bullish on everything. pimm: on a scale of one to 10, where you want to put new money? europe? steve: it depends on where you are now. pimm: you've got new money coming into your 401(k) or you managed to get something. this is brand-new money. steve: i would not allocated outside the united states. have international share market exposure. pimm: would europe be a good that? steve: i think a stronger conviction overweight for us. if there commodities -- it is underweight for us. china is an overweight for us. pimm: what about australia? steve: the problem is commodity exposure. there is a weakening currency. we decreased our underweight's. olivia: what is the risk among
your clients? we have gone several years without a 10% correction. our people calling you looking for the safest place to put their money? steve: most investors believe that the market peaked at 2000. the idea is that investors have gradually increased private wealth investors risk tolerance. pimm: do they like real estate? steve: you are sorry to see that lots of markets a runaway. there is more robust feelings about markets like real estate relatively speaking. there is a mixture and lots of caution. there is cash on the sidelines. that caution has eroded some, it has not gotten to any -- has not gotten to a stage of why would we have cash on the sidelines? pimm: you've been following the story about the airline stocks eating in a bear market? is too easy of run
last year. had a sharpr stocks run. pimm: what about now? steve: i think across the different tiers in which you can andst, high-yield debt energy is a good bet. pimm: you don't want to buy energy with energy prices were they are? steve: i think we are at a summer peak in demand for petroleum. there is a possibility for a loss in high oil prices. it's a significant risk. -- risk out ofil oil and commodities. olivia: how are you tweaking your strategy? think it's a story where clients for the most part what to be currency hedged. olivia: let's be clear. the dax is up 20%. if you were a u.s. buyer, you
would take the euro dollar. you would make 20%. exposure, itrong want to let everybody know that if you can get through every little twist and turn it, it works out. when you have pulled -- pullbacks and ricks -- risk taking, you can see equities fall and the euro currency rally. when you're looking for that cushion of a rising kirsch and, sometimes you don't get it was long stocks. about currency hedged investing in europe in places like japan. storydid you see the about corporate bonds? there will not be enough to meet them and. -- demand. bond prices are going to go higher. steve: there are more lows in american companies. look at what europe has done. the peak of qe in the eurozone and japan is stronger than the peak of the. pimm: there is more pine in
europe and japan. steve: a seasonal low means we could have lows this summer. doing yenple is denominated corporate debt. steve: large companies that can offset their currency risk because of their business makes or an actual ability to hedge these things have an opportunity to reach yields that we never expected. the new low interest rates is -75 basis points when everybody thought zero was it. pimm: what about municipal bonds? especially for wealthy investors? steve: we have long it u.s. treasury's neutral. aticipal's we would add on overweight municipals. i think these types of things, people have to realize -- let's look at the issue. pimm: i have to have you hold on. grahamind out -- lindsey
is the seventh official presidential candidate. now on bloomberg politics, senator lindsey graham's presidential announcement. lindsey graham is taking the stage getting ready to speak in his hometown in south carolina. he is the ninth republican to enter the field. let's listen. lindsey graham: i am lucky to have my and an uncle who took care of me. all of my family and all of my friends, thank you. thank you. welcome to central south carolina. my hometown. many of you have known me for a long time. i am not aging that well. sincef you have known me my family lived in the back of a bar in that building. here includinge
me ever expected to hear me say i am lindsey graham and i am running for president of the united states. [applause] thank you. ok, i will turn back there. overe they hear that all the world, that i'm running for president of the united states. it's because of you that i can make that statement. everything i am, everything i will be i/o to the kindness and generosity and example of people , while halleneca and other small towns throughout south carolina. thank you. thank you for everything.
[applause] i want to be president to protect our nation that we love so much. get ready. i am ready. i want to be present to defeat the enemies that are trying to kill us. not just paralyzed them or criticize them or contain them, but defeat them. ronald reagan's policy of peace through strength kept america safe during the cold war. i've come to conclude we will never enjoy peaceful coexistence with radical islam. intent to destroy our way of life. be and willrica can
be secure only if we have strength. security through strength will protect us. [applause] president to meet our problems head-on. honestly and realistically, for the purpose of solving them and not hiding them or taking a political advantage of them. i want to make government work for you, not the other way around. government keep its promises to you. tosupport your dreams, embrace your values and reflect your character. i want to be president to help us build a future. i will work with anyone to do it. [applause]
we made some dangerous mistakes in recent years. the obama administration and some of my colleagues in have substituted wishful thinking for sound national security strategy. every day the headlines attest to the failures of the obama/clinton the policies. it said for me to report to you that barack obama has made us less safe. simply put, radical islam is running wild. they have more safe havens, or money, or capability, more weapons to strike our homeland than any time since 9/11. they are large, they are rich, they are entrenched. poor, make them small,
and on the run. [applause] i am afraid some americans have grown tired of fighting them. i have some bad news to share with you. they are not tired of fighting you. in partnership with others, we must take the fight to them. building lines of defenses over there so they can't come here. building up and supporting forces to go after their safe havens. the world is exploding in terror and violence. all is the threat of nuclear ambitions of the radical islamists who control iran. iran are no moderates in running the government.
firme united states isn't in its intention to deny them such weapons, iran will trigger a nuclear arms race and the least stable region on earth. it will be more likely that the people who us higher to genocide would have the most effective means to commit it. israel is at risk as a result of the failed leadership. we share values and democracy. our friendship is unbreakable. to our friends in israel, i will never abandon you. i will stand firm in supporting the one and only jewish state. i say never again.
presidentng for because i have the experience, the judgment, and the will to deny the most radical regimes the most dangerous weapons. to defeat this enemy, it will require more than military might. the most powerful weapon in our arsenal is not a gun at. it is an idea. the terrorists are selling a glorious death. we must sell a hopeful life. i've learned from my travels that a small schoolhouse in a remote region educating a young girl can do more damage to radical islam than any weapon we possess. however, radical islam is not the only threat we face.
elsewhere, old adversaries are seizing opportunities to challenge our interest's. vladimir putin seized ukrainian territory and threatens they know allies. china is building their own claimed by other nations. they are challenging free navigation to the seas. our allies feel the absence of american leadership, our adversaries are taking advantage. american weakness anywhere hurts us everywhere. emboldened and our friends are going alone. detrimentalns are to our national security interests. it is time for america to come back.
and come back we will. the way you come back is to make sure the next president must be an informed and decisive commander-in-chief. ready in merely to deal with the threats i have just described. all are the past six years that speeches alone won't make us safe. if that were true, we would be really safe. resolve iswer and the only way to be safe. i am running for president of the united states because i am ready to be commander in chief on day one. i am ready on day one to defend our nation. with sound strategy, a strong alliances, ande
the city determination. i have been in the middle east more times than i can count. to all who have served our country, raise your hand. god bless each and every one of you. i've got one simple message. i have more experience with our national security than any other candidate in this race. that includes you, hillary. we will have a -- i know the
players. i know our friends and i know our enemies alike. most importantly, they know me. i have listened, learned and prepared myself for the job of commander-in-chief. i served in the air force for 33 years. it has been a true pleasure and honor. much of my adult life part of the team committed to defending america. protecting our way of life. making sure that we are safe. politicians focus on elections. the military focuses on the mission. given the privilege to serve as your president, i will focus on the mission.
[applause] that will not be easy. it never has. there are dangers that must be faced. us will, the best of have to face the worst of them. are the 1% of americans who are the men and women of the united states armed forces. [applause] promise as commander in are dangers they confront will be less. -- thek they run to sacrifices they make will be fewer or easier.
that they willem have the leadership to defeat our enemies. i can promise them their sacrifices won't be wasted. they won't fight with their hands tied behind their backs. we will end of this conflict on our terms. we will win. we canho believe disengage from the world at large and be safe i leading from behind, vote for someone else. i am not your man. the best wayieve to defend ourselves is to lead the world and make history rather than be overwhelmed by it. join me if you want to tackle
the problems at home that have been kicked down the road because they are too hard to fix or too easy to demagogue. washington's failure to do the hard right wing has put social security and medicare in serious jeopardy. anybody on medicare and social security? anybody want to be on it one day? all of us. retires, bothon programs are on track to go bust. we are living longer and fewer workers are supporting more retirees. that is unsustainable and everybody knows it. not everybody will admit it. we have to fix entitlement programs to make sure that people who need the benefits the most receive them. requireoing to
determined presidential leadership. i know from personal experience how important these programs are. we lost our parents when i was a young man. she was in middle school. we depended on it social security benefits to survive --. i have done better than i ever dreamed. if i have to take less and pay more to help those who need it most, so be it. younger people, you may have to work a little bit longer. as president, i will gladly do what it takes to save the
program that once saved my family. for those of you who yearn for a healthy and safe environment, i will join your cause. to those who seek energy independence, i will be your champion. we must have energy independence. process ton the produce a clean environment and create new well-paying jobs for americans of all generations. republicans, i will be a champion for limited and effective government in a strong -- and a strong national defense. i will be a voice for social conservative values.
[applause] i love my party. i am committed to see it grow and prosper. to my friends in the other party, on the big things we share a common faith. i will work with you to strengthen the company. our differences are real. we will debate them. you're not my enemy. you my fellow countrymen. [applause] by enemies are those who despise our shared values. enlightenment, the culture of death that seeks to destroy the dignity of life. we will fight them with our partners and we will win. two americans who trust neither
party, i will seek the political common ground our nation so desperately needs to find a. [applause] that is what i have done before. don't take my word for it. examine my record. i've got the scars to prove it. a president not of a single party that of a nation. [applause] make the do more than government smaller. i want to help make a great nation greater. i have traveled the world. i have had experiences and opportunities i never dreamed of. i have been lucky so much of my life. i was never luckier than in the people and place i come from.
[applause] those of you who know me for a long time, you know i have had some ups and downs. as the young man i lost my parents. i struggled financially and emotionally. i would not have made it through those times without you. there are a lot of so-called self-made people in this world. i am not one of them. my family, my friends, neighbors, my faith picked me up when i was down and believed in me when i had doubts. you made me the man i am today. [applause]
i am a man with many debts. friends, to you , to south carolina. president tofor repay those debts. i want to fight as hard for you as you fought for me. [applause] end, that is the only promise i can make. it's the only pledge i will sign. it's the only one that matters. if you make the president, i will fight each day harder than i thought the day before. i will keep this country safe, prosperous, and as good as the people who made it great. humbly ask for your support
and your vote. day to makeevery you proud. god bless. [applause] >> lindsey graham joins the big republican field. that was a relatively short speech and not very specific. the themes of national security and honest the on its reform. he did not talk about two issues that have created controversially it with him, immigration and climate change. stylistically, exactly what you would expect. >> he seemed very sincere. he did not talk about graphically. he referred that many of the people in the crowd would have
been shocked to hear the notion of president lindsey graham. he was joking about that at the beginning. it's interesting to think about, we talk about why somebody is running. we generally think that people do not have alter your motives. that is why they get into the race. you think that's the case with lindsey graham? he looks at this big field with no clear front runner and with an absence of strong national security leadership and experience, he says to himself why not me? he has a lot of experience, served in the air force, lookingan voters are for somebody with ideas on national security. week, thisw last issue of foreign policy is heating up in the republican party. there are big schisms within the party.
lindsey graham is a very clear position on muscular foreign policy and pro-intervention. this is the neocon position. ron paul is getting a lot of attention for a dramatically opposite set of views. lindsey graham wants to serve as a counterbalance to rand paul. he thinks it's important that somebody be there to counter the isolationist tendencies that are advanced by rand paul and others. >> if they decide they are looking for an experienced washington hand, lindsey graham is their man. the other senators are all people who just got into the senate. lindsey graham is in his third term. there are former and current evidence, john kasich used to serve in the conscious -- congress.
today, he is the only experienced person at the center he made that. >> point very vividly just now on the question of foreign policy. took -- he took a jab at his old friend and she is an old friend, hillary clinton. it's a question that gets to what the republican party wants this time around. past nomination fight, are they looking for experienced or does it feel against hillary clinton that they need some it looks like the future or tomorrow's candidates. >> there is some tension in the party. they want somebody strong on national security, they want a new face, somebody that represents a new generation. those things are impossible to reconcile.
when he made that case, that was the strongest moment of the speech. it does differentiate his product. there is a crowded market with lots of people selling themselves. he has one thing to sell, that experience. we are going to have more with a full wrapup tonight on "with all due respect." for now, we will send the tv audience back over to pimm fox. pimm: thanks very much. some of the look at top stories at the hour. it has been a record year for consolidation in the semiconductor business. there was another deal. intel has agreed to by altera. they will pay $17 billion in stock and cash. there has been speculation about the deal since the end of march. be ourxecutive will
guest. some key economic data came out today. manufacturing group more than forecast last month. the factory index grew to a three-month high. it grew at the fastest month -- rate in five months. consumer spending stalled in april and wages went up. the savings rate when up. justices revived a lawsuit claiming that abercrombie & fitch illegally denied a job to a muslim teenager. she was wearing a headscarf. the ruling will require businesses to be more careful about religious discrimination when the interview job applicants. john kerry is flying back from switzerland. he is going to boston to get his broken leg treated. he was riding his bicycle over the weekend. this will limit his travel as his talks with iran reach a
to skip an interest payment due today amid bankruptcy talks. maturing of the bonds are trading at around $.45 on the dollar. what happened to molycorp? can hoffman is here to explain it. give us the background. what is the company doing and how did it into such a dire predicament? this was one of the hottest stocks out there or it rare earths are used to make things smaller. if you pull out your iphone, there are 32 little agnes in it. was a spatere between china and japan. says supplies 90% and japan can't have any. it cut off the world. the price went up 1000%. everybody was looking for a rare
earth minor. er. the price has declined by more than 90%. it's companies like molycorp whose mind is over budget and behind and in dire straits. pimm: what is the likelihood that this missed payment, the $32 million payment, does that trigger anything? can: they have a grace. . they are probably trying to restructure things and put some pressure on creditors. they are not generating any free cash flow until 2016. they have to get this mine running properly in order for them to have a hope of continuing operations going forward. time, didn'tthis companies and engineers try to figure out other ways to get the same results in their products without using these expensive
rare earths? they are all over the place and there are substitute for rare earths. you saw general motors switch around and find better applications were cheaper materials. that was another reason. pimm: we showed earlier the chart looking at molycorp's bonds trading at $.45 on a dollar. what kind of residual value with those bonds have if the company entered bankruptcy? let's just say that if you don't see them getting that thet up and running or price of rare earths recovering it, it's a very difficult job for management to get through this. pimm: what about the management of molycorp going back to when the stock had a valuation of $6
billion for the whole company? ken: when these companies came through, i saw them on a they weren 2012, saying that rare earths were being run out of china. they thought the u.s. government was guaranteeing they would buy supplies to have an alternative source in case the chinese did come back into the market. none of those things have come true. they have new management. they are trying to restructure the company. , it'sot going to be easy a challenge for them. it does not sound at the government will guarantee buying the product. pimm: thank you for giving us the update on molycorp. let's take a look at some of the top stories across the terminal. the newest version of microsoft windows operating system comes
out next month. indows 10 will be released time for back-to-school. it will be available for pcs and tablets as a free upgrade for people currently using windows seven. europeane biggest energy companies have a way of curbing the missiles from fossil fuels. shell, bp, and four others are calling for a global price on a carbon. they made the appeal before the u.n. climate change talks in germany. the slump at the largest gambling hub is a year old. 37% forin macau fell the 12th consecutive month. graft ise against keeping gamblers away from the -- macau. those your top stories. lunchahead, reserve your with warren buffett. the meal, but it will still cost you millions.
pimm: would you like to have lunch with warren buffett? it will set you back a few million dollars. last year's auction winner paid $2.1 million. that was down from the record of $3.4 million to dine with the oracle of all how. the lunch auctions have raised $18 million for charity. the only topic that is off-limits is his future investments. interviewedere who
warren buffett several times. betty: he keeps those predictions close to his chest. some of the past lunch experiences? betty: it's cool to see who has paid the money to sit down with him. $250,000, he paid got off cheap. bill ackman that was one of the anonymous bidders who want a lunch. pimm: this takes place online? betty: we have some video of the bidding going on right now. there are less than a dozen people who have been so far. i think it's up to $525,000 now. the opening bid was for $25,000. you can get a job out of this. bid two years in a row.
now of course he is one of the two cios in her chair have to wait. -- berkshire hathaway. pimm: do we get any information about what they do speak about? betty: we don't get a lot of information. buffett and the better -- winning bidder, they do an interview together before hand. this is just down the avenue. they do several interviews. then they go into this private luncheon they can invite whoever they want. they have their stake and their wine and they can ask buffett anything it. it's not often they will reveal what they talk about. bidders, it's up to them if they want to talk about what they are asking him. hem: is it revealed what
eats? i would imagine he has a cherry coast to drink. betty: he loves his red meat. fries, there you go. he is not a huge eater. he eats like a kid. he likes his ice cream. also auctions off a lunch. . he has done this the last three years. guess with the winning bid was? pimm: $200,000. the money raised by warren buffett goes to a profit -- nonprofit in san francisco. thank you very much. now it's time for the options insights. julie? look at what's going on in the major averages. the answer today is not much.
we are not seeing much decisive movement. everything is slightly higher. let's look at options. strategist.ivatives i want to talk about all the deals activities we have seen. there is not much going on in the markets today. there are a lot of deals. you've got intel and all para. altera. what have we been seeing in terms of predicting these deals? jim: there are people that want to capture convexity. when humana comes out and says they are going to sell in andves, somebody came they are worth $20. that sort of activity wakes people up. julie: that happens before they made the announcement?
jim: before hand. really: how often do you try to track potential deal activity by looking at the options weston mark how predictive --? jim: itictive is that? was not huge in size, it looks like an institutional buyer. buyer,ere was a smart there are thousands where somebody is buying premium and not winning on that trade. anotherhere is speculation, that was juniper. was talk about ericsson looking for someone in the united states. stockirm downgraded the to a cell. it has been falling. you are mirroring that with an options strategy. jim: as it rates -- relates to
the speculation of ericsson buying juniper, we have an agreement with cisco. there is not a huge demand as we see it. there is not a huge demand for ericsson to buy them. they will miss consensus earnings in the second half of this year. they will report in july. october, prior to late october earnings, we think a miss will show up. that is slowing demand going into 2016. alie: are you looking at longer term options trade? shown july. that does not have an exclusive catalyst before it. capture july
earnings. we went out to october to do that. it does not embed october earnings. expectill be news we well before then. it will be embedded in october options. reversal.k if somebody is on a long stocks, you can sell at 29 in a straight call. you buy at 25. you can do that for $.10. you are committed to selling up there. if you are not, you are creating a position where you benefit from stock being lower. julie: thank you so much. much more of "market day" after this. ♪
record year of m&a. company netjets is replacing its chief executive after a tumultuous period, including a dispute over compensation. hillary clinton is the overwhelming favorite among iowa democrats and it shows bernie sanders is making a quick rise. good afternoon. betty: let's begin with a look at how the markets are trading. equity markets are barely changed. some disappointing economic numbers this morning. we had personal income and spending